US new home sales drop in July to all-time low

25 August 2010 17:53  [Source: ICIS news]

WASHINGTON (ICIS)--US sales of new single-family homes fell by 12.4% in July from June, the Commerce Department said on Wednesday, marking the lowest level of activity on record and fully 32% below sales recorded in July 2009.

In its monthly report, the department said that sales of new single-family homes last month were at a seasonally adjusted annual rate of 276,000 units compared with the downwardly revised figure of 315,000 reported for June.

June had seen a 23.6% improvement in single-family home sales, but that gain was high only in comparison to the revised May figure 281,000 units.

July's 276,000 figure is the lowest since the department began tracking single-family residence sales in 1963.

The decline in the US new home market can be measured against single-family new home sales that routinely reached 1.2m units annually during the housing sector’s peak years of 2002-2006.

The department also reported a sharp increase in the inventory of unsold new homes in July, with approximately 210,000 completed new single-family residences available for sale, a supply of 9.1 months at current sales rates.

The inventory was at 8 months in June and was as low as 6.3 months as recently as April. April was the final month of the year-long federal stimulus programme that provided an $8,000 (€6,320) tax credit to home buyers.

The housing market is a key downstream consumer sector for the chemicals industry, driving demand for a wide variety of chemicals and derivative products such as plastic pipe, insulation, paints and coatings, adhesives and synthetic fibres, among many others.

The American Chemistry Council (ACC) estimates that each new home built represents some $16,000 worth of chemicals and related products used in the structure or in manufacturing component materials.

The department’s gloomy numbers on new home sales came a day after the National Association of Realtors (NAR) reported that US sales of existing homes plummeted by 27% in July from June, reaching the lowest level for that data set since 1995.

The association also reported an increased glut of existing homes for sale, with the inventory climbing in July to a 12.5-month supply compared with the 9-month backlog of unsold homes seen in June.

($1 = €0.79)

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